Realty Sector Hit As Black Money Crackdown Begins

"60% of transactions in the property market happen in black."

A property dealer, on request of anonymity, spoke to NDTV on the impact of the recent demonetisation measure of the government on an industry that holds anywhere from 10 per cent to 60 per cent of its transactions in black.

"I think the property sector will be hit the hardest and the market is expected to go down by 30 per cent," he said.

Asked about the impact of the government's move on Rs 500 and Rs 1,000 notes on ongoing transactions, he said, "Disputes have developed. As those who have black money in old notes are wanting to give it ahead to close deals, but the other side doesn't want to accept it."

Not only have disputes developed, he told NDTV, but also two of his transactions been cancelled and settling them has been a strenuous task. "Everyone wants new notes," he said.

On the other hand, there are a handful within the property sector who feel this would be a positive step - those who do not rely on cash for property-based transactions.

Himani Jain, real estate agent with REMAX in Gurgaon, told NDTV, "This will help bring a lot of credibility for the Indian real estate market in front of foreign investors."

Asked who will be affected by this most, she said, "People who deal with cash-based transactions, those who are dealing with land, plots and people who are not trained or organised. They will slowly start getting eliminated."

While a majority of the property dealers are to be affected, buyers have welcomed this move as they eagerly await a fall in land prices.

Lavanya Anirudh, 40, who works in advertising, said she is looking forward to the fall in prices. "For those who have done the deal now, gold help them as they will be sitting on stashes of money, but I am looking forward to prices coming down and finally I will have my own home."

Jai Zutshi, 65, a businessman, said prices of property will come down to realistic levels and the common man is going to benefit because of that.

For an industry where the norm has been to rely on black money, it will be interesting to see if they can thrive without it.